(goods and services tax) from 12.5% to 15 percent, while lowering income tax for all and also reducing company taxes. Key and his pals present this approach – lowering direct taxation and increasing the tax on consumption – in a populist way, as if it would benefit workers. Key has added that the Working for Families package could be increased, along with some other measures, to help offset any losses for lower-waged workers and the minimum wage has been increased (minimally) by 25c an hour. Once again, there is nothing for beneficiaries.

The first thing to note about GST is how it affects people on lower incomes the most. [Read more…]

After committing to scrapping the ban on thermal generation and reviewing the ETS, John Key has discussed carbon tax as a market alternative. An adoption from the Greens, this policy would continue Key’s move to the centre. Overseas, it has been applied as a direct tax, affecting the pockets of road-users. The Workers Party opposes all measures that punish the consumer, as with GST, tax on cigarettes and the proposed levy on plastic bags.

More degradation occurs at production than consumption, and consumers have little influence over production. We must change the mode of production itself, so that it serves need rather than profit.

GST was first introduced in NZ by the fourth Labour government in 1986 at the rate of 10%. While a similar tax in Britain excluded basic family items, the only things Labour excluded from GST here were financial services, real estate transactions and the operations of very small firms.

GST significantly raised the level of indirect taxation. The proportion of government income derived from indirect tax rose from 22.5% to 33.2% within just the first two years of the new tax.

In 1988, the fourth Labour government slashed the top personal tax rate from 66% to 33% and, the following year, 1989, GST was increased to 12.5% and imposed on all goods and services.

Celebrating the 20th anniversary of Labour’s Goods and Services tax, Listener columnist David W Young wrote:

” The reason GST is much-loved by right-of-centre policy wonks in New Zealand and marvelled at by their colleagues overseas, is that it’s “pure”. (Finally, a tax that right-wingers like!) GST wasn’t adulterated to make it palatable to the masses. Calls to exempt food, education and health were rejected by Douglas and Brash’s committee. The few exceptions are rents on residential rental properties, donations and financial services.”

Young noted:

“The biggest concern about GST was that it would disproportionately harm the poor. That argument, made strenuously by unions and mainstream politicians in the 1980s, has shifted over time to the fringes of debate. It’s based on the fact that GST is effectively a regressive tax, because poorer people spend a greater proportion of their income than the rich, who put more into savings.”

(“Happy Returns”, Listener Dec 1 2006)

Today, argument about GST is continuing inside the trade union movement, but with some union leaders opposed to the wishes of their rank and file.

Below is the text of a leaflet distributed by members of the Workers Party Auckland branch at the protest earlier today by truck drivers against the recently announced increase in road user charges.

Independence from the bosses – A workers’ response required in the campaign against rising cost of living

The boss class is to blame for the recent barrage of rising costs that is hitting working people in New Zealand and internationally. The following leaflet puts forward the Workers Party’s basic position on the increase to road user chargers.

Major companies are required to pay within the market system Should the major companies pay for the costs of maintaining the roads? We think that under a market system the major companies should be forced to pay but this should not be at the expense of their employees’ wages and conditions which such companies have been driving down for decades. If they were not called to pay, then the public would be bearing costs incurred while the companies make profits. However, it should also be understood that, within a market system, the employers’ profits come from the work that their employees do for them. Therefore, even if the companies lose profits, the main issue is that workers are able to increase real incomes.

We publish below a talk given by Philip Ferguson at a recent Christchurch Workers Party forum. It is an expanded and updated version of an article originally published in the Spark in 2005 available here.

Most of the parliamentary parties favour tax cuts both for individuals and companies. Indeed, under Labour there has been a small cut in company tax and also tax credits for companies investing in R&D – and, in the latest budget, some personal tax cuts. Although the personal tax cuts are presented in a populist way, as if they would benefit workers, these parties vigorously oppose measures such as substantial increases to the minimum wage, serious across-the-board wage rises and increases in welfare payments to keep up with inflation, let alone living real wages and incomes for people on benefits. And all the parliamentary parties oppose the abolition of GST.

During the upcoming election campaign, one of the minimum platform points of the Workers Party will be demanding the abolition of GST, something that would be done by any government with even a token desire to make life a little easier for workers, especially the poorest workers.

The Workers Party for many years has said GST has to go. Below is an article originally published in The Spark in July 2005, in which Philip Ferguson explains why the rich favour this tax and why we oppose it:

In recent months the National Party has been pushing for income tax cuts. Although they present this in a populist way, as if it would benefit workers, they vigorously oppose measures such as raising the minimum wage, serious across-the-board wage rises like those sought by Auckland bus drivers and the abolition of GST.

During the upcoming election campaign, one of the minimum platform points of the Anti-Capitalist Alliance [now called the Workers Party] will be demanding the abolition of GST, something that would be done by any government with even a token desire to make life a little easier for workers, especially the poorest workers.

This day has been marked internationally since May 1st 1886, when there were strikes and protests in Chicago in pursuit of an 8 hour working day.

The US state attacked the strikers and broke up their demonstrations. Subsequently the authorities made many arrests and 4 anarchist union organisers were hanged.

Today, here we are in Wellington many years on, continuing to mark Mayday.

This Mayday finds increasing numbers of working people feeling the pinch. Transport food and fuel prices go up, while our jobs disappear. We don’t need to go on and on about how bad things are getting, we know all that already. We can feel how bad things are getting for low paid workers.

Archives

Top Posts

Except where it is indicated that an article has been solicited from or submitted by a guest contributor, articles reflect the views of Fightback as authorised by the joint website committee and production team of the organisation, which is elected annually by a meeting of members.
Event promotions, advertisements, video clips, etc, do not necessarily reflect the views of Fightback.

All original content licensed under the Creative Commons attribution non-commercial license.

Comments from first-time posters will be vetted to ensure they do not contain spam, otherwise commenting is unmoderated although comments containing racist or abusive language will be deleted.
Please use either your own name or at least a consistent alias when commenting.